Investment

In Washington, a temporary budget has been agreed upon, but the debate is really just beginning. No matter what happens at the negotiating table in the weeks and months to come, conservative rhetoric – “cuts, cuts, cuts” – will not cease; because they just don’t get it. A middle school teacher of mine put it simply: you’ve got to spend money to make money.

John Boehner and his cronies missed a critical lesson in their college Econ classes: the one in which the professor taught the ABCs of basic fiscal policy. Just as you can’t start a business without buying the capital necessary for it to thrive, Boehner can’t expect to reinvigorate the largest economy in the world without a willingness to invest in the programs and resources that will lead it to flourish down the road. The Speaker is wrong because the spending cuts he’s demanding – to the degree at which he hopes to pass them – will fail to fish the American economy out of the deep and opaque waters of recession.

When a country has plummeted into massive, debilitating debt – say, hypothetically, our country – it is reasonable to view deficit spending as a puzzling choice. But now, as Washington’s politicians become desperate and some of the United States’ most critical social programs hang in the balance, this is a question finding the lesser of two evils.

Expansionary fiscal policy pumps money into the public’s reserves. And as the government spends more, employment in domestic industries rises – and so does the productivity of those industries. Investment becomes cheaper and more people are opting into business deals. You can’t knit a blanket without the yarn, you can’t write a paper without doing the research, and you can’t grow an economy without capital investment.

There’s a name for John Boehner’s approach to the budget negotiations. Severe and tangible budget cuts are hallmarks of a contractionary fiscal policy – which is used to shrink the economy when it is being overproductive or when it begins to run the risk of creating dangerous bubbles. And in a country whose populace has a profound fear of the implications of China’s ever accelerating rise, that type of policy is far from appropriate.

The people who get the Republicans elected year in and year out – trade moguls, successful business owners, bigwig executives – have built their careers through financial investment. If the Koch brothers (or their like) treated the country as their business, they would advise their representatives to seek investment for future growth, not slice and dice the federal budget until it’s spread so thin that nothing substantive can be built upon it. It is in the interest of American industry – and the American employment rate – to continue to expand the economy.

When Republicans stand up in town meetings, or on the floor of the House and Senate and wag their fingers at the big, bad, hasty Democrats, they’re simply using scare tactics. The claim that (in a recession or deficit) all spending is disadvantageous is an infantile one. Spending cuts can be helpful in eliminating waste, but it isn’t wasteful to underwrite the American future. If we want lasting positive economic change – if we want to make money – then we’ve gotta spend money.